Government Operations Committee on Oct. 29th, 2024

[Christopher MacDonald]

The final steps in the process would be that we would present the list of projects to the departmental audit committee and the four external advisers would advise the deputy on whether or not the plan was solid in terms of the audits.

Then we would go to our departmental performance measurement evaluation and results committee. That is the committee that has all of the branch heads and the ADMs. They are providing advice to the deputy minister on whether we're hitting the programs at the right time. For example, if it's a five-year program, we would want to have evaluation results in years three to five that could support decisions on program funding renewals.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Mrs. Vignola is next.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

Thank you, Mr. MacDonald, for being with us today.

If I remember correctly, the deputy minister was here on October 1. He told us that the department's role had expanded significantly in recent years, with managing grants and contributions being a big part of that. That surprised me, because I thought that, when a department is given more responsibilities, someone would make sure it has the necessary management capacity. Apparently nobody made sure of that, which I find deplorable.

That said, are the existing management tools and processes sufficient to ensure good management? Is the problem related to the tools and processes, or to public servants' knowledge of what to do?

[Christopher MacDonald]

Thank you very much for your question.

What we found in the audit was that the centre of expertise that supports grants and contributions across the department has developed good tools and processes. Also, the CFO has put in place a system of internal controls over financial reporting for grants and contributions that is very well done.

The problem ends up being at the delivery level, where you have multiple people who are involved in delivering programs, and then there's the creation of other centres of expertise in the different branches that may be duplicating or may be contributing a little to guidance that's coming from the central. What we're looking at, really, is a lack of training for the people in the programs and maybe a lack of knowledge. Given that there are seven systems where information is stored, you might not know where to get the definitive document that you need to manage your program.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Beyond these problems, can we also talk about the problem of people working in silos without really consulting each other?

[Christopher MacDonald]

Thank you.

In terms of the people who are working in silos, we looked at all eight program branches and not just at a single program. This is where we can actually add value to the department by saying that the processes are different across the department and that you need to make sure that, to the extent possible, these processes have to be coordinated and that people have to be using the same templates. When you're putting an agreement in place, it's important for recipients to have the proper clauses in place. For example, if you don't have a clause in there related to recipient auditing and then you determine that you want to do an audit, it's then very difficult to go and do that.

You want to make sure that your templates are solid and that people can use them properly.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

There are checks and balances in place to guard against wrongdoing or fraud, call it what you will. Those mechanisms are in place. However, it looks like they weren't applied in some cases.

On the one hand, how can we ensure that the checks and balances are sufficient? On the other, how can we ensure that they are systematically applied so that any problems in terms of activating the checks and balances can be detected quickly?

[Christopher MacDonald]

There are a few ways that it could be done right now, and the strengthening of the recipient audit framework in the department will give a really good tool to managers to look at what the recipients are doing with the money.

You also have strengthening of ongoing monitoring. There are the 17 recommendations we talked about from the DG committee. A lot of strengthening of controls was envisioned by that committee, and they're not all implemented right now. We also have the five recommendations in the audit that I believe will really strengthen the control framework—not only the design of the controls, but also the implementation across the department.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

The deputy minister explained to us that there's no reporting requirement for grants. The person or organization receiving the grant is not expected to report on results.

Would it be better to have some idea of what's being done? Grant recipients could say they invested here and did this thing and achieved a particular outcome. Even if that wasn't the desired outcome, it was progress. At least there would be a sense of what can be achieved and of being on the path to a transition. Just because a desired outcome wasn't achieved doesn't mean there wasn't any progress. Okay.

The point is, why aren't we asking for any follow-up on grants?

[Christopher MacDonald]

At the end of the day, the policy or the mechanism on transfer payments allows.... When you issue a grant, and there are no real reporting requirements that have to be put in place. You can ask for these, and as we said, and as I think the CFO said when she was here, the grants represent 1% of our departmental program spending in this area.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

How do we make sure the objectives are met? It doesn't matter if it's 1% of a grant, loan or contribution. How do we make sure that the objectives have been or are being met?

[Christopher MacDonald]

At the program manager level, you would be working with the recipient and you would be getting updates from them, and in most cases—99% in our department—you would be getting quarterly and annual reports and final reports.

Then beyond the program managers, you also have the departmental results framework with key performance indicators related to each of the programs, so there are multiple ways in which the department can assess whether or not we're getting value for money or whether or not the people receiving the money are actually doing what they're supposed to do.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you, Mr. MacDonald.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Ms. Blaney, the time is yours for six minutes, please.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Thank you, Chair, and thank you, Mr. MacDonald, for being here with us today.

I have just a few questions for you today.

One of the things that you talked about earlier in your testimony, and in response to some questions, was around information management and how it could be improved. Can you expand on what that means?

[Christopher MacDonald]

What it really means is that when you're trying to support decision-making and when you're trying to know what is happening, it's really good to have a system that you can get information from and not seven different systems. You really would like to have those systems linked to the financial system so that you can easily generate reports, rather than having to look at shared drives, such the Ecolab site, which is an Internet site, or different PIMS, which is one of the systems they use, or GCIMS, the other system they use.

We would really like to have a better system to hold this information, and also better practices at the working level for how people store their information.

As we mentioned in the report, there were 14 files that were not found, but then at the end of the day, they were provided to the audit team after the audit was done. We've seen this in other audits as well.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Thank you for that.

We know that the audit also found that indigenous applicants are more likely to be labelled as high risk. Almost half the proposals were rated as medium risk. A higher-risk rating really means an increased reporting and oversight of requirements, which leads to a lot of additional administrative costs for the recipients. I'm curious, because the report also found that in the majority of the files they reviewed, there was no documentation to support the risk rating. That's very concerning to me.

Could you talk to us a little bit about how your assessment reviewed this? Why are indigenous applicants being disproportionately labelled as high risk? How do we make sure that in the future, any kind of risk ratings for anyone is fair and there's actual documentation to support those ratings?

[Christopher MacDonald]

We looked at the hundred files. We looked at the documentation provided with respect to the final risk assessment done by the program officers and any supporting documents that supported their risk assessment. We found very little documentation to support that.

Actually, when you're looking at the investment oversight committee and looking at those kinds of projects, it leads to asking further if there's a consistent way that this is being done. You could put a good oversight mechanism in place, but if the information that supports it is not well done, it could lead to issues with respect to that oversight mechanism.

In terms of what the department is doing, this was actually identified as one of the 17 recommendations in the DG report. They've been working on guidance and training for people to make it more consistent across the department. As we mentioned in the report, in many areas there's a lack of consistent approaches across the eight program branches. Training and better tools to support them in making this risk assessment will go a long way toward helping the recipients get their projects approved and get the appropriate risk assessment done, which will, as you mentioned, impact the administrative costs.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Well, it's interesting to me that you talked earlier about the idea of being objective, so when we see these kinds of incidents happen, it's very clear that there's a lack of objectivity, and you answered that question well, but the part I didn't see addressed was the issue of racism.

If we're seeing this consistently—and it is fairly consistent—are there any steps taken in the process toward what we can do to better educate people around making assumptions that are often very unconscious and so that there's more accountability?

[Christopher MacDonald]

Yes. I think the most important thing that was done in the audit was to raise this issue to management so that they can know this is happening. We actually have evidence of this happening in the department.

I know that over the past several months there has been a renewed effort by our indigenous engagement group, which is in the strategic policy branch, to really look horizontally across the department to identify and address these types of issues. This is one source of information for them to use and to improve practices across the department in this regard.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Thank you. That's very helpful.

I do confess that I have a small bias. I come from a non-profit background, so I spent a lot of time reading federal government contracts, making sure we were compliant and looking at all the systems built internally to address that.

I really appreciate what you're talking about in terms of being the internal auditing process, which is very different from an external auditing process. I hear that you're focusing internally, but as you go through that process, I'm wondering if there is any component of that in which you actually talk with grant recipients to see how things work for them.

I often found it interesting to have conversations about what would be more effective in getting us to have a higher level of accountability. I'm wondering if in that internal process there is any of that discussion happening as well.

[Christopher MacDonald]

Yes. Last fall, actually, I was out with the evaluation team doing site visits on the west coast. When we were in British Columbia, we were meeting with farmers who were using some of our contribution money to put different crops in during the fall and winter to support migratory birds. When we were talking to the farmers, they were really appreciative of not only being able to participate in this and to help the department in its mandate with respect to supporting migratory birds, but it also helped them in their crop rotations. We were right on the ground, talking to the farmers, which was a great experience for me.

We also met people who donated land as part of the ecological gifts program and who explained why they did it. Actually, we had a meeting on the land with the people who donated the land and the NGO that was restoring the land and with the program officials who were managing this whole project. It was really wonderful to see the work they had done to restore the area and to see the migratory birds that were using that area.

We do make it a focus of our audits to actually go out and meet with people.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Thank you for that.

[Christopher MacDonald]

You're welcome.

[The Chair, Conservative, Kelly McCauley]

Thanks very much.

We have Mrs. Kusie, please.